Hursh Consulting & Communications: Kevin Hursh on Agriculture

566 Adilman Drive, Saskatoon, SK Canada, S7K 7H5
Tel: (306) 933-0138 Fax: (306) 249-4869 kevin@hursh.ca

Hursh on Agriculture

May 31, 2005

Web site for sprayer information
Sprayer technology has changed dramatically in recent years. There’s a lot of new research on the best way to apply crop protection products to get the best bang for your buck. With every question that’s answered, new questions arise. A new Web site called Canada Sprayer Guide has been launched to provide information from researchers, industry and government. The Web site is produced and maintained by a well-known communications company called Meristem out of Calgary. Even though there’s industry support involved, the site is not an advertisement for companies. Instead it has articles from well-known researchers such as Tom Wolf at Agriculture and Agri-Food Canada in Saskatoon and Brian Storozynsky at Alberta Agriculture’s Ag Tech Centre in Lethbridge. There’s a wide range of nozzles to chose from these days and producers need to consider water volumes, droplet sizes, spray pressures and the type of product they’re applying. The site helps make sense of all the options. There’s also information on applicator training courses and discussion on where the future of sprayer technology may be heading. The Web site is www.canadasprayerguide.com. I’m Kevin Hursh.

May 30, 2005

Crops need to get growing
The biggest threat to the Saskatchewan crop at this point of the growing season is lack of development. At 85 per cent complete, seeding progress is on par with the five-year average. Some areas still have a considerable amount of work to do, but most are in the home stretch. Parts of southwestern Saskatchewan would like to see rain, but soil moisture through most of the province is very good – a welcome change from what we’re often facing at this time. But it has been cool. Light frosts have hampered growth. Daytime temperatures have only occasionally reached the normal highs for this time of year and the minimum temperatures have often been much lower than normal. Cloudy, showery weather with lots of wind has been the norm. I haven’t seen any calculations, but I’d bet growing degree days are well below where they should be. Crop germination has been good and grasshoppers aren’t a problem, so there are lots of positives. The biggest negative is the slow rate of growth. A couple weeks from now, this may not matter. With some warm weather, crops could catch up quickly. Hopefully, that will be the case. We know from last year’s experience that late crops can be a problem. I’m Kevin Hursh.

May 29, 2005

Production problems fail to raise PROs
Despite all the news about production problems in various regions of the world, grain price predictions haven’t improved much. Heat and dryness is affecting parts of the U.S. winter wheat crop. Parts of Australia are facing a terrible drought and that should have an impact on malting barley supply. It’s dry in Spain and well as parts of North Africa and that should bode well for durum prices. However, last week’s Pool Return Outlook from the Canadian Wheat Board showed only small improvements. In the current crop year, the price for No. 1 spring wheat with 12.5 per cent protein is expected to total $3.77 a bushel once average Saskatchewan freight and handling is deducted. The spring wheat price for the new crop year is predicted to be $3.64 a bushel. The durum PRO has increased two dollars a tonne for the current crop year as well as $3 a tonne for the new crop year, but the values aren’t anything to write home about. The current crop year price for No. 1, 12.5 per cent durum in Saskatchewan is $4.43 a bushel. The new crop year price is only $4.16 a bushel. The current crop year price for two-row malting barley is $2.65 a bushel. The new crop year price is $2.52. At this point, analysts believe there’s going to be ample supply despite the various problem spots, but that could change. I’m Kevin Hursh.

May 26, 2005

Days of wind hamper spraying operations
The windy, damp weather is putting many producers in a bind. Spraying operations are running behind. In some cases, crop is emerging before a burn-off operation can be accomplished. Depending upon the crop and the weeds, this can be a big problem. Sometimes there are no effective weed control options if the burn-off has been missed. On some early seeded fields, it’s time for in-crop spraying, but that hasn’t been possible. Grant McLean at the Ag Knowledge Centre in Moose Jaw says he’s also hearing from producers concerned over seeding delays. While overall seeding progress in the province is on par with normal, there are areas with excess moisture that still have a lot of work to do. The showers and cool weather of recent days have hindered the drying process. Some producers are considering broadcast seeding of canola and flax because the land is too wet for regular seeding implements. A lot of areas would like to see some warm, dry weather for the next while. Everyone would like to see the wind stop blowing at a gale force. I’m Kevin Hursh.

May 25, 2005

New Saskatchewan feedlot
The last couple of years have not been easy for the cattle feeding industry, but there is long-term optimism that the feedlot industry can grow in Saskatchewan. Border Line Feeders, a new entrant to the industry, has started the final stages of construction. This privately held corporation has raised over $1.2 million in share equity for the $3 million project. A share offering is currently open. Border Line Feeders is located 3 miles south of Ceylon. This is about an hour south of Regina and it’s only 20 minutes away from a U.S. Port of Entry. Border Line will start out as a 7,000 head feedlot, but it has the water and the permitting to expand to 20,000 head in the future. Plans are to have the new feedlot operational before the fall calf run. It will start with about 7 full time employees. The economic spin-offs from construction are being felt in nearby communities. When up and running, it will be a major market for silage and feed grains. It takes a lot of work to raise the necessary money and see a feedlot project through to completion. It’s good to see this kind of faith in the future of the beef industry. I’m Kevin Hursh.

May 24, 2005

Moisture is looking good
Growing season precipitation patterns have changed quite dramatically in recent weeks. In early May, the east side of the Saskatchewan grainbelt was running well below normal for springtime precipitation. Last week saw rain across the province with significant totals in many eastern areas. The PFRA map for percent of normal precipitation since April 1 has changed substantially. The majority of the province is now showing average to above average precip. The northwestern grainbelt is well above average. The PFRA is showing pockets around Melfort and Moose Jaw, as well as the extreme southwestern corner as below normal, but these are relatively small areas. The crop report from Saskatchewan Agriculture also paints a favourable picture. Crop reporters say topsoil moisture is adequate in all but a few localized areas. In fact, surplus moisture is a bigger concern than any shortage. Crops, forage and pasture have the moisture for a good start in most areas. I’m Kevin Hursh.

May 23, 2005

American farmers can't agree either
Sometimes it seems that Canadian farm groups and farm leaders don’t agree on much. Somehow it’s comforting to know that agricultural views are also polarized south of the border. The most recent example is the long, drawn-out legal dispute on the beef check-off in the U.S. On Monday, in a 6 to 3 vote, the U.S. Supreme Court overturned a lower court decision that had found the check-off to be in violation of the First Amendment. The check-off has been credited with dramatically increasing the demand for beef through promotion, research and education. However, opponents claim farmers don’t have enough say in how the check-off is run. The check-off became mandatory in 1987. Both sides in the debate claim a majority of producers support their view. At least for now, American beef producers will keep paying the check-off, working together to promote their product. Despite the U.S. Supreme Court ruling, opponents will continue efforts to force a producer referendum on the issue. Sounds a lot like some of the issues and some of the controversy within Canadian agriculture. I’m Kevin Hursh.

May 19, 2005

Good start to growing season
As we head into the May long weekend, things look pretty good across the Saskatchewan grain belt. Sometimes by this juncture, there are significant problems brewing. Some years it’s desperately dry and we’re worried about whether there will be decent germination or even enough moisture to sustain the plants that do germinate. On some other May long weekends, there’s been rain or snow and producers have worried about the lateness of the season for seeding. This year, conditions certainly aren’t perfect everywhere, but most areas started with good subsoil moisture and the rain this week has helped with topsoil moisture. Seeding progress has been good and it looks like the crop will go in the ground in a timely manner. There have been some very cold temperatures, but damage to emerging crops has not been extensive. We’ve had winds, but not the extreme wind and soil erosion experienced last year. As an added bonus, grasshoppers shouldn’t be a problem this year. No one can predict what will happen in the weeks and months ahead, but the growing season is off to a good start. I’m Kevin Hursh.

May 18, 2005

JRI buys ConAgra elevators
It’s the opposite of what we’ve come to expect. JRI, James Richardson International, a privately owned Canadian company has purchased four high throughput elevators from ConAgra, a huge U.S. based multi-national company. It was around 1997 when ConAgra entered the grain handling business in Western Canada, building terminals at Yorkton, Nokomis and Corrine, Saskatchewan as well as Nesbitt, Manitoba. The facilities are based on steel grain bin storage, rather than concrete. Now, ConAgra has decided to exit Western Canada and one of the long-standing Canadian players is purchasing the assets. JRI, a subsidiary of James Richardson & Sons, is Canada’s largest privately owned agribusiness. Among farmers, it’s known for the oilseed crusher Canbra Foods and the network of prairie elevators that carry the Pioneer name. Pioneer has 60 elevators on the prairies, with 24 being high throughput. The purchase price for the ConAgra elevators was not disclosed, but I’d bet JRI bought them for considerably less than replacement value. I’m Kevin Hursh.

May 17, 2005

A decade of biotech crops
Biotech crops, in other words genetically modified crops, have been grown for the past ten years in North America. Biotech supporters estimate that earlier this month, the one- billionth acre of biotech crop was planted. Although there are still lots of critics of creating new crop traits with gene splicing, most North American farmers have embraced the technology. In Western Canada, the majority of our canola acres are GM varieties. In the United States, it’s estimated that about 40 per cent of the corn acreage and 80 per cent of the soybean acreage is planted with biotech varieties. So far, consuming nations have said they don’t want genetically modified wheat and Europe is still uncomfortable with GM technology. But as time passes, biotech continues to win the day. The dismissal of a Class Action lawsuit by Saskatchewan organic farmers against GM canola is another step in the progression. Ten years ago, the opposition against biotech crops was greatly underestimated, but gradually science, reason and economics are prevailing. I’m Kevin Hursh.

May 16, 2005

Cow herd grows older
Incredibly, we’re quickly approaching the second anniversary of BSE in Canada. One big change over the past two years has been the retention of older cows. With no export market for older cattle or beef from older cattle, prices have been terrible. A lot of cows that would normally have been culled are still in the herd. Statistics Canada says that as of April 1, Canadian beef producers reported holding over 759,000 head of cull cows, about 14 per cent of the national herd. In Saskatchewan, 220,000 head of cull cows still were on farm. Again, that’s about 14 per cent of the total. Of those cull cows, 80 per cent were expected to calve this year. Rather than sending old cows to market for a disappointing return, a lot of producers are hoping those old girls can raise another calf. The result is that more than a third of the provincial beef cow herd is made up of animals that are over 7 years of age. BSE has changed the age demographic of the Canadian herd. I’m Kevin Hursh.

May 15, 2005

Confusion over joining CAIS for 2005
There’s some confusion with the CAIS program and what producers need to do in order to participate for 2005. Advertisements being run by the CAIS administration say the deadline to join is May 31. Producers are supposed to choose their level of coverage for 2005 and contact CAIS by mail or phone. However, letters being sent out by the CAIS administration say that isn’t necessary for most producers. If you participated in the income stabilization program for 2003 or 2004, you’ll be automatically enrolled for 2005 at the same level of coverage as chosen in your last year of participation. So unless you haven’t participated in CAIS or unless you want to change your level of coverage, it appears there is no reason to do anything. The letters being sent to producers seem to contradict the paid ads that CAIS has in farm newspapers. Choosing a coverage level is a bit strange anyway. All indications are that the deposit requirement will be ended. If you don’t have to make a deposit, what reason would a producer have for choosing anything other than maximum coverage? I’m Kevin Hursh.

May 12, 2005

Profitable pigs
It’s great to see strong profits in at least one sector of agriculture. These are good times for pork producers. In fact, hog prices have been steadily profitable since February of last year. Prior to 2004, hog producers suffered through two years with prices generally running at less than the cost of production. Brad Marceniuk, an industry and policy analyst with Sask Pork says prices of $160 to $170 per ckg for Saskatchewan 100 index hogs should stay around for the remainder of the second quarter. For the third quarter of 2005, Marceniuk is predicting an average price of $140 to $150 per ckg. He pegs the average cost of production in the low $130’s. At current price levels, a market hog is worth about $160. Typical producers have a net profit of $30 to $35 per hog. Good times never last forever, but it’s been a much-needed run of profitability for the pork industry. This is in sharp contrast to the economic pain in the grain and beef industries. I’m Kevin Hursh.

May 11, 2005

Saskatchewan is drying out
The extreme southeastern corner of the province received significant precipitation over the past week, but precipitation was light over the rest of the grainbelt. There is increasing concern over topsoil moisture conditions, particularly in some eastern areas. The PFRA Drought Watch maps show an expanding area where precipitation has been below average since the first of April. An area that includes Regina, Melville, Wynyard and Melfort is categorized as extremely dry receiving less than 40 per cent of normal precipitation from April 1 to May 11. The dry weather is favourable for seeding progress, but rain is going to become increasingly important. With no significant rain in the forecast, the topsoil will continue drying out and that can be a problem for shallow seeded crops like canola. The western side of the grainbelt has had more growing season precipitation, but moisture conditions there are also slipping. For instance, the area considered average for springtime precipitation has now moved to just west of Swift Current on the PFRA maps. “We sure could use a good rain,” will soon be a common comment across the province. I’m Kevin Hursh.

May 10, 2005

Keep building bins
It could be a good year to be in the grain bin business. It’s far too early to predict what kind of a crop we’re going to grow this year, but we do know that grain movement has been slow and there’s a big inventory sitting on the farm taking up storage space. Even with an average crop this year, a lot of producers will be short on bins. According to Statistics Canada, there are near record levels of canola and durum stocks on farm. There are lots of peas and lentils tying up bins, as well as canaryseed and mustard. Overall, inventory is well above the ten year average. In some cases, the quality of stored grain is so poor that markets are limited. In other cases, producers are holding onto product because price levels are unattractive. As the summer proceeds, there will be pressure on farmers to market grain. It’ll be needed for cash flow and to free up space for the fall. However, we’re likely to head into the fall with more inventory than usual. If the crop looks good, grain bins could become a hot commodity as the summer proceeds. I’m Kevin Hursh.

May 9, 2005

Quebec'margarine law challenged
While we complain a lot about international trade barriers and the protectionism of other countries, there is also a lot of protectionism within Canada. A prime example is Quebec’s margarine colour regulation. In Quebec, the dairy lobby is so strong that margarine can’t be yellow like butter. The government of Alberta has now launched an interprovincial trade challenge against Quebec’s margarine colour rules. Alberta is being supported by Saskatchewan and Manitoba. The Vegetable Oil Industry of Canada is applauding the action pointing out that margarine makers cannot sell their product into Quebec without incurring the extra cost of producing a different coloured margarine specifically for that market. Less margarine is consumed in Quebec and this has an impact on the canola industry. An Internal Trade Panel heard the case on May 9. A decision is expected in late June. Federal, provincial and territorial governments signed an Agreement on Internal Trade back in 1994. This margarine colour case will test whether Canada is committed to free trade within the country. I’m Kevin Hursh.

May 8, 2005

Rising input costs
Everyone knows that farm expenses are up, but the magnitude is hard to quantify. No one is publishing much survey data. Keystone Agricultural Producers, the general farm organization in Manitoba, has released the results from a survey it conducted on fuel and fertilizer prices. The only good news is on phosphate fertilizer. The information from KAP shows a current year price for 12-52-0 of about $402 a tonne - only a few dollars higher than the price reported back in 1999. That’s not the case with nitrogen. KAP says the price of urea, 46-0-0, is approximately $410 a tonne this year. Back in ‘99, the price was only $268. The increase over six years has been 53 per cent. Anhydrous ammonia has seen a 68 per cent increase over the same time. On fuel costs, a current year price of 63 cents a litre is reported for farm diesel, nearly double the price in ’99. KAP’s 2005 Fuel & Fertilizer Survey is posted as a spreadsheet at www.kap.mb.ca. I’m Kevin Hursh.

May 5, 2005

Unusual precipitation pattern
The moisture situation in Saskatchewan is the opposite of what we typically see. Since April first, the west side of the province has had above normal precipitation while the east side is running well below normal. Precipitation maps published by the PFRA show almost all of Alberta has had below normal precip in the past month, but by the time you hit the western side of Saskatchewan, precipitation ranges from average to well above average. A few spots, such as east of Rosetown, are listed as extremely wet. However, everything east of Prince Albert, Humboldt, Moose Jaw and Gravelbourg has had below normal precip this spring. The area southeast of Regina, including Weyburn and Estevan is listed as extremely dry. This was a region swimming in moisture last spring. Subsoil moisture levels are generally good across the province. It’s a lot better spring than we often see. And it should be noted that one month does not make a trend. But it is interesting to see the east – west precipitation pattern reversed at this point in the growing season. I’m Kevin Hursh.

May 4, 2005

Cattle prices are poor
There is again a large price difference between Canadian and American fed cattle. Sandy Russell, a beef economist with Saskatchewan Agriculture says the spread is currently as high as $34 per cwt. That means a typical fed steer is worth about $450 more in the U.S. Back in mid-February, when an early March opening of the border to live Canadian was expected, the spread was as narrow as $15 per cwt. Russell says most Canadian feedlots are losing money at current fed cattle prices. When calves were purchased, the feedlots were projecting better prices for fed animals. As for feeder cattle, the price of 500 to 600 pound steer calves in Saskatchewan has been averaging about $1.15 a pound, as compared to $1.21 at the same time last year. Some of the calves coming to market are enrolled in the government set-aside program and cannot be slaughtered until either October of this year or January of 2006. Sandy Russell says set-aside calves are being discounted in the marketplace with the amount varying widely from one week to another and one auction market to another. I’m Kevin Hursh.

May 3, 2005

Producer money still stuck in CAIS deposits
Over 15,000 Saskatchewan producers have money tied up in CAIS deposits - deposits that are no longer necessary. The average deposit is $8,380 for a total of over $126 million. The deadline for making CAIS deposits was extended from March 31 of 2005 to March 31 of 2006, effectively making the deposit a moot point for the time being.
Officials say any money over the one-third deposit requirement can be quite readily removed by just giving them a call. However, the bulk of the money cannot be removed, at least not yet. It requires agreement from eight jurisdictions in order to enact the necessary amendment. Manitoba has signed on. So have Saskatchewan and the Yukon. It is hoped that signed agreements will soon come from Alberta and Ontario. After that, three more signatures will still be required. It’s unfortunate this is taking so long. Producers need the cash and the deposits serve no useful purpose. Letting farmers have access to their own money would help deal with the cash crunch of seeding expenses. I’m Kevin Hursh.

May 2, 2005

Expect higher grain freight rates
Grain freight rates are likely to increase in the upcoming crop year. The Canadian Transportation Agency has announced a 4.4 per cent increase in the volume-related Composite Price Index. This index is used to establish railway revenue caps for the movement of Western grain. The increase is an inflation factor to cover price changes in railway labour, fuel, material and capital inputs. Grain freight rates have become increasingly complicated with incentives for multiple care loading as well as volume discounts. However, officials with the Canadian Transportation Agency say the increase in Composite Price Index is probably the best estimate available on what the increase will be on overall producer charges. Across Western Canada, the average railway haul is about 900 miles at a cost of about $26 a tonne. An increase of 4.4 per cent would increase the average freight bill by over a dollar a tonne. That may not sound like much, but it adds up to thousands of dollars in extra deductions for a typical grain producer. I’m Kevin Hursh.

May 1, 2005

Cold soil and early seeded crops
It’s unusual to have such low temperatures over so many days at the end of April and beginning of May. Sure, we’ll sometimes get a snowstorm at this time of year, but it’s rare to have so many consecutive days where the temperature plummets at night and struggles to rise above freezing during the day. Statistically, it usually pays to seed crops like peas early. This year, though, you have to wonder about early seeded crops. The soil temperature has dropped dramatically. Seed that went into warm soil germinated quickly, but now has stalled. There’s some worry about increased seed rot under these conditions. Producers are also wondering about their weed burn-off. After such a major cold snap, now long will it take before weeds are actively growing again so that you can hit them with glyphosate? Fortunately, the weather forecast is calling for a return to more seasonal temperatures. In the week ahead, seeding activity should pick up across the grainbelt. It will take some time before we know how the early seeded crops have fared. I’m Kevin Hursh.

Hursh on Agriculture

Archives